Long Form: Competition — Where’d you go?

If you find yourself in New York eager to examine the hustle and bustle, the grit, the battle royale of Wall Street, chances are you’d end up more disappointed than a man looking for sunshine in Seattle.

These days, the titans of finance no longer gather in Manhattan. Stock exchange floors, famous for their visual of hundreds of cocaine-induced traders screaming to get their trades in, now lie more desolate than Midwestern steel mills. Even the economic cluster around Wall Street has vanished: lawyers are less in need due to technology, banks haven’t fully re-staffed since the last global recession, and other supporting vendors can now work remotely while avoiding the exorbitant Midtown rent prices. Hell, even the shawarma carts have picked up and moved to Brooklyn for better business prospects.

But one should not be too distraught, because for those looking for a glimpse into real competition, one should follow “I’m Real” poet J.Lo on to the 6th and make their way to Spanish Harlem during the middle of summer.

There one can find over 1100 participants engaging in one the fiercest and arduous battle of them all, the Rap Olympics. The best of the best of Big Apple’s lyricist endure five gruesome marathon rounds that test the humor, intellect, spontaneity, and stamina of NYC’s hip-hop prospects. Only then, if you survive five rounds of verbal combat, do you have the chance to take home the ultimate prize: $500, a Rolex, and a chance that an associate from recording company will take your mixtape back to their manager.

A version of the Rap Olympics has been taking place over the past 30 years. Some of the most well-known participants were Big Boi, Andre 3000, P. Diddy, members of A Tribe Called Quest, and Eminem. Among these, the most successful was the Detroit-based rapper… and he placed second.

After a brief sabbatical at the turn of the century, creators revived the Rap Olympics in 2007 as “a need to create an arena to revive a much-needed healthy level of competition.” Following suit, Rap Olympic battles were revived in D.C., Philly, and even Eminem’s hometown of Detroit. Creators of all these events cited the urgent need for a residence for patrons to elevate each other through competition.

But let’s be real, many scoff at the need for a revival of competition in American’s or believe that the United States is still hospitable to a healthy playing ground; there is a new narrative that the avenues of competition just started to erode, or the old folk tale that only the weakest can’t compete.

When I hear such thoughts, I take a deep breath and mentally recite the ever Zen lyrics scribed by our friends Outkast, “Hold up, slow up, stop, control.”

Because here are the facts.

In a study done under the Obama administration, 12 of the major 13 industries have concentrated market share over the past fifty years and over 75% of US industries have becomes less competitive in the past two decades, 50% of all publicly traded firms have vanished in the past 10 years. In a Harvard Business School study conducted in 2012, 71% of managers expect the trend of an uncompetitive markets to magnify. Since 2008 American firms have engaged in one of the largest rounds of mergers in their country’s history, worth $10 trillion. The recent purchase of Whole Foods by Amazon only further cements the idea of oligopoly future where only a few firms control every distribution and supply chain.

Now there several reasons that academics and economists have highlighted as what makes America uncompetitive today. But it is also crucial to evaluate how America became uncompetitive.

While there are several explanations, most of them stem from a failure to adapt to the new reality of industrial transitions to an information economy, counterproductive defederalized public policy, and a shift in cultural norms.

As 10th place runner up of 1991 Rap Olympics Diddy suggested, “You may know how it might be, but let me tell you how it is”. So, let’s explore how more money developed into more problems.

Long before he was an iconic actor, Sean Connery dabbled in various fields of work. The former James Bond held a variety of positions ranging from lorry driver, milkman, art exhibitioner, bodybuilder, and coffin polisher. In a 2000 interview, Mr. Connery admitted he doesn’t share a kinship in those taking a self-described arduous journey to become an established actor, because S-Con admits his quality of life rarely diminished as he transitioned from one job to the next.

But the days of earn a good living on a blue-collar wage, regardless of specific job or personal skillset, are history. Aside from the post WWII boom, every transition in the American economy has, since the late 1800s, left more people behind than the prior capitalist evolution. From the Industrial revolution, to the early and latest technology boom, more workers fail to adapt to the adequate level needed to compete in the modern economy. Even in today’s hustle economy, money nerds from UC Berkeley document that every millennial career transition likely squanders their long term impact as the uphill battle to regain new skills is even steeper.

This distressing fate is borne about by comprehensive data. Over 25% of millennials in middle-income nations and 15% in rich ones are NEETs: not in education, employment or training. The job market they are entering is more difficult to navigate more than ever, and in many countries the rules are rigged to favor those who already have a job.

And despite the burgeoning faction of devotees to an orange-faced God, there is no savior here. Currently, the United States government spends an alarmingly low 0.9% of GDP on job displacement and transition training (Countries like Germany, Sweden, and Australia for example, spends 3–5% of GDP on training citizens who lost their jobs due to trade or factors of “globalization”).

Many conservatives and libertarians would rightly argue that even if job displacement training spending, the net benefits would be minimal. The tortoise-like pace of establishing a national bureaucracy and plan to design a bipartisan approved job training program would have long term benefits for only a handful before the economy engines pivot again. Though overall economic trends transitions over several decades, skillset demands change even more precipitously. There are a number of data points to support this notion, but the one that sticks out the most is this: 65% of older grade school students will work in a job that currently does not exist yet, for those entering college next year an astonishing 22% will be part of a workforce that will be created in the future.

To makes matters worse, not only have public policy leaders failed to materialize a feasible plan to deter decreased competitiveness, many embraced a political philosophy and legislative agenda that only metastasized the problem.

For those of you familiar with Honest Wednesday’s work, we are always up to the latest hair fashion trends. So, a story back in 2012 caught our eye. In 2012, Jestina Clayton started a hair braiding business in her home in Centerville, Utah. The business allowed her to pay the bills at perceived peril to society. But when Mrs. Clayton put an ad on a local website, trouble ensued. One day she got an email from a stranger who proclaimed, “It is illegal in the state of Utah to do any form of extensions without a valid cosmetology license,” the e-mail read. “Please delete your ad, or you will be reported.” To get a license, Jestina would have to spend more than a year in cosmetology school. Tuition would cost $16,000 dollars or more. Jestina shut down her business temporarily — and sued the state of Utah. Luckily, home girl finally won her case and became the only reason to visit Utah.

Mrs. Clayton isn’t alone having her small business being stampeded by public policy spearheaded to derail competition. In fact, every state has a unique cosmetology standard meant to make it harder for at home hairdressing. But anti-competitive rules aren’t confined to cosmetology. In every state, you can find a variety of laws making it harder for Americans to compete. From farming, to massage therapy, to even Girl Scout cookies sales locations, state legislator have been strategically crippling avenues for individuals to capture market share from larger corporations.

In the 1950s, fewer than 5 percent of American workers needed a license to do their job. Today, about a third of workers need licenses. The increase has been driven partly by the shift away from manufacturing jobs (which don’t tend to be licensed) and toward service jobs (which often require licenses).

This has also been driven by professions themselves. Licensing rules make it harder for outsiders to enter a field. This gives the upper hand to those already in the profession, because it limits competition and allows them to raise prices.

But again, this is probably self-evident. What is mortifying, is the decade-long systematic and choregraphed effort to pull back labor laws that have obliterated the chances for the average joe to get a fair shake.

Beginning around the 1970s, evolving schools of anti-trust and anti-labor doctrine gained momentum throughout the legal ecosystem and paved the way for mergers which otherwise would never have been approved by the federal government. As historian Daniel Rodgers, in his book Age of Fracture, explains, “Law had always been at the foundation of market exchange, setting its rules and claims, but lawyers had not always known much about economics…Their domain was the field of dispute adjudication, not economic maximization. By the late 1970s, however, courses in the price system had become a booming enterprise in the law schools, and a new rhetoric of costs and efficiency was bearing down hard on antitrust judgments, liability law, and, most dramatically, regulatory policy — reshaping them all on models of highly idealized markets.”

And politicians on the national level quickly followed suit. From Ronald Reagan up until Bill Clinton, administrations apart from the Carter administration expedited legislation to give back labor and competition rulemaking to the states. Anti-trust laws evaporated making way for the already discussed $10 trillion in mergers of the past decade. These two shifts in the judicial and regulatory precedence, allowed local professionals and business groups to have even greater influence on competition laws. It might be hard to change national cosmetology certification guidelines (if there are any), but it’s quite easy to band together a group of 50–100 people and stuff the pocket of local legislators who is also take on a second job to make an adequate living.

Now it’d be easy to allocate 100% of the blame onto politicians and rich old men, and in future Honest Wednesday posts, we will. It is, however, important to examine that a shit in cultural norms, co-opted with the evolving anti-competitive marketplace, made the notion of a fair playing ground become a mythical fantasy like Harry Potter or efficient and speedy service at the DMV.

Because, when Americans have been faced with Eminem’s conundrum of one shot, one moment, one opportunity to seize everything they wanted they’ve usually ended up vomiting their mom’s spaghetti. Not because they didn’t understand the consequences or were nervous, but because many have bought into an illusion that there was greater value in disengaging rather than engaging in competitive battle.

We should ask what genuinely makes people competitive? For the majority, it’s the understanding that you know you’re aren’t the worst and the feeling you are the best. Nerds at the Harvard School of Public Health dabbed this notion as “last place aversion.” Where individuals don’t necessarily want to be the greatest, they just don’t want to be the worst. Granted, there are the Michael Jordans, Marc Cubans, John Stewart, and the kids who win the Spelling Bee that are genuinely striving for greatness. There are also those that are fundamentally broken and battered who are overcoming a scorn on their soul like Steve Jobs, Elon Musk, and every kid who didn’t win the Spelling Bee who are also striving to be great.

But the overwhelming social science evidence points to the majority engaging in rigorous battle to be slightly above the mean. For example, most people said they would rather make $50,000 (and live in poverty) while the average earning is $25,000 rather than being well off and making $100,000 while the median hovers around $200,000. Further, it was those who made minimum wage who were most opposed to raising it. When asked why many responded, “we aren’t the ones who need the help, there are much people making less” when there really isn’t a lower rung on the employed economic ladder.

But brush aside the not-being-the-worst part and focus on the best component of the equation of competition. You’ll find that these many individuals have found several means to satisfy that variable. In his first book as a sitting public official, Senator Ben Sasse describes this perilous phenomena as “the transition of producers to consumers” where individuals are now in the position to feel like winners without doing the work. One can consume endless amounts of entertainment without much hassle, 88% of millenials consume their “news” from Facebook that fits their bias, meaning gone are the days of someone having to peruse through an entire newspaper or magazine to feel informed. If you have a job there is a good chance you got it through a friend or family member, and your only exposure to any chaos (politically or physically) may be through the internet given how gerrymandered districts are.

It may be an impossible task to pinpoint the cause and endpoint of all these factors mentioned, but there are a few variables to unpack. Yes, we are living in an unfair society, but we also opted out of competing, and opted into complaining about the lack of competitive opportunities.

Finding the solution to the erosion of competition is a complex balancing act of navigating between being hands-on and believing in the theory of the invisible hand. Monopoly and anti-competitive practices evolve over time at an unpredictable pace. Embracing competition can mean more regulation to ensure it (though that’s always not the case) and it can mean just the opposite. We must intelligently extrapolate solutions from both traditions. We must know when to deregulate; like when government stepped in and deregulated the airline sector to bolster competition. And know when not too, in instances like the electricity markets that led to Enron, rolling blackouts, and sub-par HBO films.

Additionally, it is important to fight back on a local level. It may not be a monumental victory, but stories like my girl Jestina Clayton highlight the importance of resisting with reason against rubbish. Secondly, it’s important to understand those who are truly in a competitive market. Forget the investment professionals where 10% of them own 85% of all investments on the market, and look to the little guys. The burrito shops in San Francisco, a comedian or storyteller trying to make it in the big cities, and yes those embarking on the 6th to head to New York’s Rap Olympics.

Because, ultimately, this isn’t scraping a knee or a niche culturally-degrading product like Bravo reality television- there are broader implications.

Curtailing economic competition forces you to pay higher premiums for lower quality. Think about the quality of product you get from Comcast, your retail bank, or your utility company. Nevada and Florida are the two states that have the most days of sunshine, yet have a less than optimal level of solar options due to non-competitive municipalities suppressing consumer energy choices.

Further, sectors need a healthy level of “looking over your shoulder” to elevate an overall industry. When Rap Olympic creators brainstormed the idea of bringing back the event they were motivated by the minimal availability of quality and intelligent hip-hop music and unhealthy level of champagne popping- sexist rap. It may be correlative, but you’ve recently seen a resurgence in beautifully conscious rhyming in artists like Chance The Rapper, Kendrick Lamar, and the resurgence of Common and Missy Elliot in 2016.

Finally, the fate of our future rests on having a genuine understanding of how competitive we are and the role competition plays in our society. For failing to purge the illusion of a fair economic battlefield from our political narrative only emboldens those with wealthy pockets who are protected by oligopoly encouraged legislation and endangers the already disenfranchised who can’t seem to find a viable strategy to climb up the economic ladder.

So, when supporters of bankers, utility owners, airlines bull rush the airwaves or any conversation with the idea that high earners today have derived their cash on a fair playing ground, weaponize the facts and beat down this false and preposterous narrative.

Or for a more succinct approach to digesting this topic. Take a deep breath and remind yourself of the topically poignant words from the trail blazers of socially-conscious hip-hop, A Tribe Called Quest, “Fuck y’all know about true competition? That’s like a AL pitcher on deck talking about he hittin.’

Founder of Honest Wednesdays and pragmatic optimist.